The Chairman of the NY Fed’s Board of Directors Resigns

The NY Fed announced today that Stephen Friedman, chairman of the board of directors of the New York Federal Reserve resigned effective immediately, amid questions about his purchases of stock in his former firm, Goldman Sachs (GS).

Friedman, 71, a retired senior partner and chairman of Goldman Sachs has served as chairman of the New York Fed since January 2008. He holds a substantial amount of shares in the company. As of March 9, he owned 111,516 shares, which are worth nearly $15 million based on today’s closing stock price. Some 12,916 shares are restricted stock units to be delivered at a later date.

Regional Fed bank directors appointed by the central bank are not allowed to own shares of bank holding companies, a status that Goldman gained in September of last year. Yet, Friedman continued to buy more shares even after Goldman Sachs came under the Fed’s supervision.

From NY Fed: Thomas C. Baxter, Jr., New York Fed’s executive vice president and general counsel, said: “With respect to Steve’s purchases of Goldman shares in December of 2008 and January of 2009, which have been the object of some attention lately, it is my view that these purchases did not violate any Federal Reserve statute, rule or policy.”……..Awesome spin there Baxter.

Denis Hughes, the board’s deputy chair, will take over Friedman’s duties.